Starting today, I would like to remind my clients or those investors, who have the habit of depositing their hard earned money in their respective Public Provident Fund (PPF) accounts in the first week of April every year, that now onwards they can use the opportunity of topping up their PPF investments by an additional Rs. 50,000.
Announced in Budget 2014 by the Finance Minister Arun Jaitley, increase in the investment limit of PPF from Rs. 1 lakh to Rs. 1.50 lakh got notified by the Government of India on August 13 and the Reserve Bank of India (RBI) on August 22. Here are the links to their respective notifications:
The same has now been brought to the notice of all the post offices as well as some of the nationalised/commercial banks which are authorised by the Government and the RBI to open PPF accounts and accept deposits in these accounts.
Nationalised or commercial banks, which have been notified and have started accepting the increased limit of deposits, include State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB), ICICI Bank, Axis Bank, Canara Bank, Andhra Bank, Allahabad Bank, Bank of India (BoI), Oriental Bank of Commerce (OBC), Bank of Maharashtra (BoM), Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Syndicate Bank, UCO Bank, Punjab & Sind Bank (PSB), Union Bank of India, United Bank of India, Vijaya Bank, IDBI Bank, State Bank of Patiala, State Bank of Bikaner & Jaipur (SBBJ), State Bank of Travancore (SBT), State Bank of Hyderabad and State Bank of Mysore.
Make PPF deposit between 1st & 5th of a month to earn maximum out of it
As most of the investors know, interest on our PPF deposits gets calculated on the minimum balance lying in the account between 5th day and the last day of a month, it is advisable for an investor to deposit cash in the account between 1st and 5th day of that month or if a cheque is deposited, then it gets cleared on or before 5th day of that month.
Features of Public Provident Fund (PPF)
For those investors, who are yet to open a PPF account, I would like to quickly highlight some important features of this most loved investment:
* A PPF account can be opened by a resident individual in his/her own name or on behalf of a minor of whom he/she is the guardian.
* A PPF account can be opened at a post office or some of the nationalised or commercial banks mentioned above.
* The minimum tenure of a PPF account is 15 years which can be further extended in blocks of 5 years each.
* Though the tenure is 15 years, investors are allowed to have premature withdrawals or avail the loan facility subject to certain terms and conditions.
* Interest Rate on PPF deposits is notified by the Government of India every year and the rate remains fixed for the whole of that financial year. For FY 2014-15, the rate stands at 8.70% per annum compounded annually.
* Investments made in a PPF account qualify for deduction under section 80C of the Income Tax Act, 1961.
* It is one of the only three investment schemes in India which still qualify as Exempt-Exempt-Exempt (EEE) from taxation point of view. The other two being the Employees’ Provident Fund (EPF) and Equity-Linked Savings Schemes (ELSS).
* Non-Resident Indians (NRIs) are not allowed to open a PPF account. Even Hindu Undivided Families (HUFs) are no longer allowed to open it.
With economic growth finally gaining some strength to touch 5.7% in the first quarter of the current financial year, inflation showing early signs of slowing down, global economies consolidating on their recovery path, the Modi government showing some early signs of taking action on its strategies laid down in the first 100 days and the Indian stock markets gaining strength steadily, would you still be investing in PPF or rather invest in ELSS this year to take part in the growth of Indian economy? Please share your views.